Section 1. K.S.A. 1996 Supp. 12-2621 is hereby amended to read
as
follows: 12-2621. (a) With respect to the categories of coverage
described
in subparagraphs (d)(1) through (4) of K.S.A. 12-2618, and
amendments
thereto, premium contributions to the pool shall be based upon
appro-
priate manual classification and rates, plus or minus applicable
experience
credits or debits, and minus any advance discount approved by the
trus-
tees, not to exceed 25% of manual premium. The pool shall use
rules,
classifications and rates as promulgated by the national
council on com-
pensation insurancean approved rating organization
for workers com-
pensation if the pool has been in operation for less than five
years. Such
rates shall either be the rates effective June 1, 1994, or the
prospective
loss costs, as defined in K.S.A. 40-1113c, and amendments thereto,
plus
expenses necessary to administer the pool. For purposes of
subsection
(b), the prospective loss costs shall be presumed to be the 70%
required
to be deposited in the claims fund. If the pool has been in
operation for
more than five years, the board of trustees may determine such
rates and
discounts as approved by the commissioner. Premium contributions
to
the pool for all other lines of insurance shall be based on rates
filed by a
licensed rating organization or on rates of certain companies
filing rates
with the commissioner and approved by the commissioner for the
pool.
In lieu of the foregoing, the board of trustees may determine such
clas-
sification, rates and discounts as approved by the
commissioner.

Premium contributions to any pool providing life insurance or
any pool
providing group sickness and accident insurance as described in
K.S.A.
12-2617, and amendments thereto, shall be based on sound actuarial
prin-
ciples.

(b) An amount equal to at least 70% of the annual premium shall
be
maintained in a designated depository for the purpose of paying
claims

602 1997 Session
Laws of Kansas Ch.
125

in a claims fund account. The remaining annual premium shall be
placed
into a designated depository for the payment of taxes, fees and
adminis-
trative and other operational costs in an administrative fund
account.

(c) Any moneys for a fund year in excess of the amount necessary
to
fulfill all obligations of the pool for that fund year, including
any obligation
to retain adequate surplus funds, as defined by subsection (h) of
K.S.A.
12-2618, and amendments thereto, in lieu of specific and aggregate
excess
insurance, may be declared to be refundable by the trustees not
less than
12 months after the end of the fund year. Any such refund shall be
paid
only to those members who remained participants in the pool for an
entire
year. Payment of previously earned refunds shall not be contingent
on
continued membership in the pool.

Sec. 2. K.S.A. 44-505 is hereby amended to read as follows:
44-505.
(a) Subject to the provisions of K.S.A. 44-506 and amendments
thereto,
the workers compensation act shall apply to all employments
wherein
employers employ employees within this state except that such act
shall
not apply to:

(1) Agricultural pursuits and employments incident thereto,
other
than those employments in which the employer is the state, or any
de-
partment, agency or authority of the state;

(2) any employment, other than those employments in which the
em-
ployer is the state, or any department, agency or authority of the
state,
wherein the employer had a total gross annual payroll for the
preceding
calendar year of not more than $20,000 for all employees and
wherein
the employer reasonably estimates that such employer will not have
a
total gross annual payroll for the current calendar year of more
than
$20,000 for all employees, except that no wages paid to an employee
who
is a member of the employer's family by marriage or consanguinity
shall
be included as part of the total gross annual payroll of such
employer for
purposes of this subsection, except where the employer is a
self-employed
subcontractor under circumstances wherein K.S.A. 44-503, and
amend-
ments thereto, would otherwise apply;

(3) any employment, other than those employments in which the
em-
ployer is the state, or any department, agency or authority of the
state,
wherein the employer has not had a payroll for a calendar year
and
wherein the employer reasonably estimates that such employer will
not
have a total gross annual payroll for the current calendar year of
more
than $20,000 for all employees, except that no wages paid to an
employee
who is a member of the employer's family by marriage or
consanguinity
shall be included as a part of the total gross annual payroll of
such em-
ployer for purposes of this subsection;

(4) the employment of any firefighters who are members of a
fire-
men's relief association for whom a valid statement of election to
except
such members from the provisions of the workers compensation act
has

Ch. 125 1997
Session Laws of Kansas
603

been filed with the director by the governing body of such
firemen's relief
association as provided in K.S.A. 44-505d and amendments thereto;
or

(5) services performed by a qualified real estate agent as an
inde-
pendent contractor. For the purposes of this act a qualified real
estate
agent shall be deemed to be an independent contractor if such
qualified
real estate agent is licensed by the Kansas real estate commission
as a
salesperson under the real estate brokers' and salespersons'
license act
and for whom: (A) Substantially all of the remuneration, whether or
not
paid in cash, for the services performed by such individual as a
real estate
salesperson is directly related to sales or other output, including
the per-
formance of services, rather than to the number of hours worked;
and
(B) the services performed by the individual are performed pursuant
to
a written contract between such individual and the person for whom
the
services are performed and such contract provides that the
individual will
not be treated as an employee with respect to such services for
state tax
purposes.

(b) Each employer who employs employees in employments which
are excepted from the provisions of the workers compensation act
as
provided in subsection (a) of this section, shall be entitled to
come within
the provisions of such act by: (1) Becoming a member in and by
main-
taining a membership in a qualified group-funded workers'
compensation
pool, as provided by K.S.A. 44-581 to 44-591, inclusive, and
amendments
thereto; or (2) filing with the director a written statement of
election to
accept thereunder. Such written statement of election shall be
effective
from the date of filing until such time as the employer files a
written
statement withdrawing such election with the director. All written
state-
ments of election or of withdrawal of election filed pursuant to
this sub-
section shall be in such form as may be required by the director by
rules
and regulations.

(c) This act shall not apply in any case where the accident
occurred
prior to the effective date of this act. All rights which accrued
by reason
of any such accident shall be governed by the laws in effect at
that time.

Sec. 3. K.S.A. 1996 Supp. 44-508 is hereby amended to read as
fol-
lows: 44-508. As used in the workers compensation act:

(a) ``Employer'' includes: (1) Any person or body of persons,
corpo-
rate or unincorporate, and the legal representative of a deceased
em-
ployer or the receiver or trustee of a person, corporation,
association or
partnership; (2) the state or any department, agency or authority
of the
state, any city, county, school district or other political
subdivision or
municipality or public corporation and any instrumentality thereof;
and
(3) for the purposes of community service work, the entity for
which the
community service work is being performed and the governmental
agency
which assigned the community service work, if any, if either such
entity
or such governmental agency has filed a written statement of
election

604 1997 Session
Laws of Kansas Ch.
125

with the director to accept the provisions under the workers
compensa-
tion act for persons performing community service work and in such
case
such entity and such governmental agency shall be deemed to be the
joint
employer of the person performing the community service work and
both
shall have the rights, liabilities and immunities provided under
the work-
ers compensation act for an employer with regard to the community
serv-
ice work, except that the liability for providing benefits shall be
imposed
only on the party which filed such election with the director, or
on both
if both parties have filed such election with the director; for
purposes of
community service work, ``governmental agency'' shall not include
any
court or any officer or employee thereof and any case where there
is
deemed to be a ``joint employer'' shall not be construed to be a
case of
dual or multiple employment.

(b) ``Workman'' or ``employee'' or ``worker'' means any person
who
has entered into the employment of or works under any contract of
serv-
ice or apprenticeship with an employer. Such terms shall include
but not
be limited to: Executive officers of corporations; professional
athletes;
persons serving on a volunteer basis as duly authorized law
enforcement
officers, ambulance attendants, mobile intensive care technicians,
fire-
fighters, but only to the extent and during such periods as they
are so
serving in such capacities; persons employed by educational,
religious and
charitable organizations, but only to the extent and during the
periods
that they are paid wages by such organizations; persons in the
service of
the state, or any department, agency or authority of the state, any
city,
school district, or other political subdivision or municipality or
public
corporation and any instrumentality thereof, under any contract of
serv-
ice, express or implied, and every official or officer thereof,
whether
elected or appointed, while performing official duties; persons in
the serv-
ice of the state as volunteer members of the Kansas department of
civil
air patrol, but only to the extent and during such periods as they
are
officially engaged in the performance of functions specified in
K.S.A.
48-3302 and amendments thereto; volunteers in any employment, if
the
employer has filed an election to extend coverage to such
volunteers;
minors, whether such minors are legally or illegally employed; and
per-
sons performing community service work, but only to the extent and
dur-
ing such periods as they are performing community service work and
if
an election has been filed an election to extend coverage to such
persons.
Any reference to an employee who has been injured shall, where
the
employee is dead, include a reference to the employee's dependents,
to
the employee's legal representatives, or, if the employee is a
minor or an
incapacitated person, to the employee's guardian or conservator.
Unless
there is a valid election in effect which has been filed as
provided in K.S.A.
44-542a and amendments thereto, such terms shall not include
individual
employers, limited or general partners or self-employed persons,
except
a self-employed subcontractor performing work for a
contractor.

Ch. 125 1997
Session Laws of Kansas
605

(c) (1) ``Dependents'' means such members of the employee's
family
as were wholly or in part dependent upon the employee at the time
of
the accident.

(2) ``Members of a family'' means only surviving legal spouse
and
children; or if no surviving legal spouse or children, then parents
or grand-
parents; or if no parents or grandparents, then grandchildren; or
if no
grandchildren, then brothers and sisters. In the meaning of this
section,
parents include stepparents, children include stepchildren,
grandchildren
include stepgrandchildren, brothers and sisters include
stepbrothers and
stepsisters, and children and parents include that relation by
legal adop-
tion. In the meaning of this section, a surviving spouse shall not
be re-
garded as a dependent of a deceased employee or as a member of
the
family, if the surviving spouse shall have for more than six months
willfully
or voluntarily deserted or abandoned the employee prior to the date
of
the employee's death.

(3) ``Wholly dependent child or children'' means:

(A) A birth child or adopted child of the employee except such a
child
whose relationship to the employee has been severed by
adoption;

(B) a stepchild of the employee who lives in the employee's
house-
hold;

(C) any other child who is actually dependent in whole or in
part on
the employee and who is related to the employee by marriage or
consan-
guinity; or

(D) any child as defined in subsections (3)(A), (3)(B) or (3)(C)
who
is less than 23 years of age and who is not physically or mentally
capable
of earning wages in any type of substantial and gainful employment
or
who is a full-time student attending an accredited institution of
higher
education or vocational education.

(d) ``Accident'' means an undesigned, sudden and unexpected
event
or events, usually of an afflictive or unfortunate nature and
often, but not
necessarily, accompanied by a manifestation of force. The elements
of an
accident, as stated herein, are not to be construed in a strict and
literal
sense, but in a manner designed to effectuate the purpose of the
workers
compensation act that the employer bear the expense of accidental
injury
to a worker caused by the employment.

(e) ``Personal injury'' and ``injury'' mean any lesion or change
in the
physical structure of the body, causing damage or harm thereto, so
that
it gives way under the stress of the worker's usual labor. It is
not essential
that such lesion or change be of such character as to present
external or
visible signs of its existence. An injury shall not be deemed to
have been
directly caused by the employment where it is shown that the
employee
suffers disability as a result of the natural aging process or by
the normal
activities of day-to-day living.

(f) The words ``arising out of and in the course of employment''
as
used in the workers compensation act shall not be construed to
include

606 1997 Session
Laws of Kansas Ch.
125

injuries to the employee occurring while the employee is on the
way to
assume the duties of employment or after leaving such duties, the
prox-
imate cause of which injury is not the employer's negligence. An
em-
ployee shall not be construed as being on the way to assume the
duties
of employment or having left such duties at a time when the worker
is
on the premises of the employer or on the only available route to
or from
work which is a route involving a special risk or hazard and which
is a
route not used by the public except in dealings with the employer.
An
employee shall not be construed as being on the way to assume the
duties
of employment, if the employee is a provider of emergency services
re-
sponding to an emergency.

The words, ``arising out of and in the course of employment'' as
used
in the workers compensation act shall not be construed to include
injuries
to employees while engaged in recreational or social events under
cir-
cumstances where the employee was under no duty to attend and
where
the injury did not result from the performance of tasks related to
the
employee's normal job duties or as specifically instructed to be
performed
by the employer.

(g) ``Burden of proof'' means the burden of a party to persuade
the
trier of facts by a preponderance of the credible evidence that
such party's
position on an issue is more probably true than not true on the
basis of
the whole record.

(h) ``Director'' means the director of workers compensation as
pro-
vided for in K.S.A. 75-5708 and amendments thereto.

(i) ``Health care provider'' means any person licensed, by the
proper
licensing authority of this state, another state or the District of
Columbia,
to practice medicine and surgery, osteopathy, chiropractic,
dentistry, op-
tometry, podiatry or psychology.

(j) ``Secretary'' means the secretary of human
resources.

(k) ``Construction design professional'' means any person who is
an
architect, professional engineer, landscape architect or land
surveyor who
has been issued a license by the state board of technical
professions to
practice such technical profession in Kansas or any corporation
organized
to render professional services through the practice of one or more
of
such technical professions in Kansas under the professional
corporation
law of Kansas or any corporation issued a certificate of
authorization un-
der K.S.A. 74-7036 and amendments thereto to practice one or more
of
such technical professions in Kansas.

(l) ``Community service work'' means: (1) Public or community
serv-
ice performed as a result of a contract of diversion or of
assignment to a
community corrections program or conservation camp or suspension
of
sentence or as a condition of probation or in lieu of a fine
imposed by
court order; or (2) public or community service or other work
performed
as a requirement for receipt of any kind of public assistance in
accordance

Ch. 125 1997
Session Laws of Kansas
607

with any program administered by the secretary of social and
rehabilita-
tion services.

(m) ``Utilization review'' means the initial evaluation of
appropriate-
ness in terms of both the level and the quality of health care and
health
services provided a patient, based on accepted standards of the
health
care profession involved. Such evaluation is accomplished by means
of a
system which identifies the utilization of health care services
above the
usual range of utilization for such services, which is based on
accepted
standards of the health care profession involved, and which refers
in-
stances of possible inappropriate utilization to the director for
referral to
a peer review committee.

(n) ``Peer review'' means an evaluation by a peer review
committee
of the appropriateness, quality and cost of health care and health
services
provided a patient, which is based on accepted standards of the
health
care profession involved and which is conducted in conjunction with
util-
ization review.

(p) ``Group-funded self-insurance plan'' includes each
group-funded
workers compensation pool, which is authorized to operate in this
state
under K.S.A. 44-581 through 44-592 and amendments thereto, each
mu-
nicipal group-funded pool under the Kansas municipal group-funded
pool
act which is covering liabilities under the workers compensation
act, and
any other similar group-funded or pooled plan or arrangement that
pro-
vides coverage for employer liabilities under the workers
compensation
act and is authorized by law.

(q) On and after the effective date of this act, ``workers
compensation
board'' or ``board'' means the workers compensation board
established
under K.S.A. 1996 Supp. 44-555c and amendments thereto.

(a) It shall be the duty of the employer to provide the services
of a
health care provider, and such medical, surgical and hospital
treatment,
including nursing, medicines, medical and surgical supplies,
ambulance,
crutches, and apparatus, and transportation to and from the home of
the
injured employee to a place outside the community in which such
em-
ployee resides, and within such community if the director in the
director's
discretion so orders, including transportation expenses computed in
ac-
cordance with subsection (a) of K.S.A. 44-515 and amendments
thereto,
as may be reasonably necessary to cure and relieve the employee
from
the effects of the injury.

608 1997 Session
Laws of Kansas Ch.
125

(1) The director shall appoint, subject to the approval of the
secretary,
a specialist in health services delivery, who shall be referred to
as the
medical administrator. The medical administrator shall be a person
li-
censed to practice medicine and surgery in this state and shall be
in the
unclassified service under the Kansas civil service act. The
medical ad-
ministrator, subject to the direction of the director, shall have
the duty
of overseeing the providing of health care services to employees in
ac-
cordance with the provisions of the workers compensation act,
including
but not limited to:

(A) Preparing, with the assistance of the advisory panel, the
fee
schedule for health care services as set forth in this
section;

(B) developing, with the assistance of the advisory panel, the
utili-
zation review program for health care services as set forth in this
section;

(C) developing procedures for appeals and review of disputed
charges or services rendered by health care providers under this
section;

(D) developing a system for collecting and analyzing data on
expend-
itures for health care services by each type of provider under the
workers
compensation act; and

(E) carrying out such other duties as may be delegated or
directed
by the director or secretary.

(2) The director shall prepare and adopt rules and regulations,
whichshall be in effect on or before July 1, 1993, and
which establish a schedule
of maximum fees for medical, surgical, hospital, dental, nursing,
voca-
tional rehabilitation or any other treatment or services provided
or or-
dered by health care providers and rendered to employees under
the
workers compensation act. The schedule shall include provisions and
re-
view procedures for exceptional cases involving extraordinary
medical
procedures or circumstances and shall include costs and charges for
med-
ical records and testimony.

(3) The schedule of maximum fees shall be reasonable, shall
promote
health care cost containment and efficiency with respect to the
workers
compensation health care delivery system, and shall be sufficient
to en-
sure availability of such reasonably necessary treatment, care and
at-
tendance to each injured employee to cure and relieve the employee
from
the effects of the injury.

(4) (A) In every case, all fees, transportation costs, charges
under this
section and all costs and charges for medical records and testimony
shall
be subject to approval by the director and shall be limited to such
as are
fair, reasonable and necessary. The schedule of maximum fees shall
bereviewed annuallyrevised as necessary at least
every two years by the
director to assure that the schedule is current, reasonable and
fair.

(B) There is hereby created an advisory panel to assist the
director
in establishing a schedule of maximum fees as required by this
section.
The panel shall consist of the commissioner of insurance and seven
mem-
bers appointed as follows: (i) One person shall be appointed by the
Kansas

Ch. 125 1997
Session Laws of Kansas
609

medical society, (ii) one member shall be appointed by the
Kansas asso-
ciation of osteopathic medicine, (iii) one member shall be
appointed by
the Kansas hospital association, (iv) one member shall be appointed
by
the Kansas chiropractic association, and (v) three members
appointed by
the secretary. One member appointed by the secretary shall be a
repre-
sentative of employers recommended to the secretary by the
Kansas
chamber of commerce and industry. One member appointed by the
sec-
retary shall be a representative of employees recommended to the
sec-
retary by the Kansas AFL-CIO. One member appointed by the
secretary
shall be a representative of entities providing vocational
rehabilitation
services pursuant to K.S.A. 44-510g and amendments thereto. Each
ap-
pointed member shall be appointed for a term of office of two years
which
shall commence on July 1 of the year of appointment.

(C) All fees and other charges paid for such treatment, care and
at-
tendance, including treatment, care and attendance provided by
any
health care provider, hospital or other entity providing health
care serv-
ices, shall not exceed the amounts prescribed by the schedule of
maxi-
mum fees established under this section or the amounts authorized
pur-
suant to the provisions and review procedures prescribed by the
schedule
for exceptional cases. A health care provider, hospital or other
entity pro-
viding health care services shall be paid either such health care
provider,
hospital or other entity's usual charge for the treatment, care and
at-
tendance or the maximum fees as set forth in the schedule,
whichever is
less. In reviewing and approving the schedule of maximum fees, the
di-
rector shall consider the following:

(i) The levels of fees for similar treatment, care and
attendance im-
posed by other health care programs or third-party payors in the
locality
in which such treatment or services are rendered;

(ii) the impact upon cost to employers for providing a level of
fees
for treatment, care and attendance which will ensure the
availability of
treatment, care and attendance required for injured
employees;

(iii) the potential change in workers compensation insurance
premi-
ums or costs attributable to the level of treatment, care and
attendance
provided; and

(iv) the financial impact of the schedule of maximum fees upon
health
care providers and health care facilities and its effect upon their
ability
to make available to employees such reasonably necessary treatment,
care
and attendance to each injured employee to cure and relieve the
em-
ployee from the effects of the injury.

(D) Members of the advisory panel attending meetings of the
advi-
sory panel, or attending a subcommittee of the advisory panel
authorized
by the advisory panel, shall be paid subsistence allowances,
mileage and
other expenses as provided in K.S.A. 75-3223 and amendments
thereto.

(5) Any contract or any billing or charge which any health care
pro-
vider, vocational rehabilitation service provider, hospital,
person, or in-

610 1997 Session
Laws of Kansas Ch.
125

stitution enters into with or makes to any patient for services
rendered in
connection with injuries covered by the workers compensation act or
the
fee schedule adopted under this section, which is or may be in
excess of
or not in accordance with such act or fee schedule, is unlawful,
void and
unenforceable as a debt.

(6) The director shall have jurisdiction to hear and determine
all dis-
putes as to such charges and interest due thereon and shall
prescribe
procedural rules to be followed by the parties to such disputes. In
the
event of any controversy arising under this section, payments shall
not be
delayed for any amounts not in dispute or controversy. Acceptance
by
any provider of services of a payment amount under this section
which is
less than the full amount charged for the services, shall not
affect the
right to have a review of the claim for the outstanding or
remaining
amounts. In the event of a dispute as to such charges, the health
care
provider, hospital, institution, person or other provider under
this section
may appear and be represented in the action under the workers
com-
pensation act.

(7) If the director finds, after utilization review and peer
review, that
a provider or facility has made excessive charges or provided or
ordered
unjustified treatment, services, hospitalization or visits, the
provider or
facility shall not receive payment pursuant to this section from an
insur-
ance carrier, employer or employee for the excessive fees or
unjustified
treatment, services, hospitalization or visits and such provider or
facility
shall repay any fees or charges collected therefor.

(8) Not later than December 31, 1993, the director shall develop
and
implement, or contract with a qualified entity to develop and
implement,
utilization review and peer review procedures relating to the
services
rendered by providers and facilities, which services are paid for
in whole
or in part pursuant to the workers compensation act. The director
may
contract with one or more private foundations or organizations to
provide
utilization review, as appropriate, of entities providing health
care services
or vocational rehabilitation services, or both, pursuant to the
workers
compensation act.

(9) By accepting payment pursuant to this section for treatment
or
services rendered to an injured employee, a health care provider or
health
care facility shall be deemed to consent to submitting all
necessary records
to substantiate the nature and necessity of the service or charge
and other
information concerning such treatment to utilization review and
peer re-
view under this section. Such health care provider shall comply
with any
decision of the director pursuant to subsection (a)(10).

(10) If it is determined by a peer review committee that a
provider
improperly overutilized or otherwise rendered or ordered
unjustified
treatment or services or that the fees for such treatment or
services were
excessive, the director may order the provider to show cause why
the
provider should not be required to repay the amount which was paid
for

Ch. 125 1997
Session Laws of Kansas
611

rendering or ordering such treatment or services and shall
provide the
provider a hearing thereon if requested. If a hearing is not
requested
within 30 days of receipt of the order and the director decides to
proceed
with the matter, a hearing shall be conducted and if a prima facie
case is
established a final order shall be issued by the director. If the
final order
is adverse to a health care provider, the director shall provide a
report to
the licensing board of the health care provider with full
documentation
of any such determination, except that no such report shall be
provided
until after judicial review if the order is appealed. Any order of
the di-
rector under this section shall be subject to review by the
board.

(11) Except as provided by K.S.A. 60-437 and amendments
thereto
or this section, all reports, information, statements, memoranda,
pro-
ceedings, findings and records which relate to utilization review
or peer
review conducted pursuant to this section, including any records of
peer
review committees, shall be privileged and shall not be subject to
discov-
ery, subpoena, or other means of legal compulsion for release to
any
person or entity and shall not be admissible in evidence in any
judicial or
administrative proceeding, except those proceedings authorized
pursuant
to this section.

(12) A provider or facility may not improperly charge or
overcharge
a workers compensation insurer or charge for services which were
not
provided, for the purpose of obtaining additional payment.

(13) Any violation of the provisions of this section which is
willful or
which demonstrates a pattern of improperly charging or
overcharging
workers compensation insurers constitutes grounds for the director
to
impose a civil fine not to exceed $5,000. Any civil fine imposed
under
this section shall be subject to review in accordance with the act
for
judicial review and civil enforcement of agency actions in the
district court
for Shawnee county. All moneys received for civil fines imposed
under
this section shall be deposited in the state treasury to the credit
of the
workers compensation fund.

(14) As used in this subsection (a), unless the context or the
specific
provisions require otherwise, ``provider'' means any health care
provider
or vocational rehabilitation service provider, and ``facility''
means any fa-
cility providing health care services or vocational rehabilitation
services,
or both, including any hospital.

(b) Any health care provider, nurse, physical therapist, any
entity pro-
viding medical, physical or vocational rehabilitation services or
providing
reeducation or training pursuant to K.S.A. 44-510g and
amendments
thereto, medical supply establishment, surgical supply
establishment, am-
bulance service or hospital who accept the terms of the workers
compen-
sation act by providing services or material thereunder shall be
bound by
the fees approved by the director and no injured employee or
dependent
of a deceased employee shall be liable for any charges above the
amounts
approved by the director. If the employer has knowledge of the
injury

612 1997 Session
Laws of Kansas Ch.
125

and refuses or neglects to reasonably provide the services of a
health care
provider required by this section, the employee may provide the
same
for such employee, and the employer shall be liable for such
expenses
subject to the regulations adopted by the director. No action shall
be filed
in any court by a health care provider or other provider of
services under
this section for the payment of an amount for medical services or
materials
provided under the workers compensation act and no other action
to
obtain or attempt to obtain or collect such payment shall be taken
by a
health care provider or other provider of services under this
section, in-
cluding employing any collection service, until after final
adjudication of
any claim for compensation for which an application for hearing is
filed
with the director under K.S.A. 44-534 and amendments thereto. In
the
case of any such action filed in a court prior to the date an
application is
filed under K.S.A. 44-534 and amendments thereto, no judgment may
be
entered in any such cause and the action shall be stayed until
after the
final adjudication of the claim. In the case of an action stayed
hereunder,
any award of compensation shall require any amounts payable for
medical
services or materials to be paid directly to the provider thereof
plus an
amount of interest at the rate provided by statute for judgments.
No
period of time under any statute of limitation, which applies to a
cause
of action barred under this subsection, shall commence or continue
to
run until final adjudication of the claim under the workers
compensation
act.

(c) (1) If the director finds, upon application of an injured
employee,
that the services of the health care provider furnished as provided
in
subsection (a) and rendered on behalf of the injured employee are
not
satisfactory, the director may authorize the appointment of some
other
health care provider. In any such case, the employer shall submit
the
names of three health care providers that are not associated in
practice
together. The injured employee may select one from the list who
shall
be the authorized treating health care provider. If the injured
employee
is unable to obtain satisfactory services from any of the health
care pro-
viders submitted by the employer under this subsection (c)(1),
either
party or both parties may request the director to select a treating
health
care provider.

(2) Without application or approval, an employee may consult
a
health care provider of the employee's choice for the purpose of
exami-
nation, diagnosis or treatment, but the employer shall only be
liable for
the fees and charges of such health care provider up to a total
amount of
$500. The amount allowed for such examination, diagnosis or
treatment
shall not be used to obtain a functional impairment rating. Any
medical
opinion obtained in violation of this prohibition shall not be
admissible
in any claim proceedings under the workers compensation
act.

(d) An injured employee whose injury or disability has been
estab-
lished under the workers compensation act may rely, if done in good
faith,

Ch. 125 1997
Session Laws of Kansas
613

solely or partially on treatment by prayer or spiritual means in
accordance
with the tenets of practice of a church or religious denomination
without
suffering a loss of benefits subject to the following
conditions:

(1) The employer or the employer's insurance carrier agrees
thereto
in writing either before or after the injury;

(2) the employee submits to all physical examinations required
by the
workers compensation act;

(3) the cost of such treatment shall be paid by the employee
unless
the employer or insurance carrier agrees to make such
payment;

(4) the injured employee shall be entitled only to benefits that
would
reasonably have been expected had such employee undergone
medical
or surgical treatment; and

(5) the employer or insurance carrier that made an agreement
under
paragraph (1) or (3) of this subsection may withdraw from the
agreement
on 10 days' written notice.

(e) In any employment to which the workers compensation act
ap-
plies, the employer shall be liable to each employee who is
employed as
a duly authorized law enforcement officer, ambulance attendant,
mobile
intensive care technician or firefighter, including any person who
is serv-
ing on a volunteer basis in such capacity, for all reasonable and
necessary
preventive medical care and treatment for hepatitis to which such
em-
ployee is exposed under circumstances arising out of and in the
course
of employment.

(f) No person shall be subject to civil liability for libel,
slander or any
other relevant tort cause of action by virtue of performing
utilization
review or peer review under contract with the director pursuant to
sub-
section (a)(7).

Sec. 5. K.S.A. 44-510b is hereby amended to read as follows:
44-
510b. Where death results from injury, compensation shall be paid
as
provided in K.S.A. 44-510 and amendments thereto, and as
follows:

(a) If an employee leaves any dependents wholly dependent upon
the
employee's earnings at the time of the accident, all compensation
benefits
under this section shall be paid to such dependent persons. Such
de-
pendents shall be paid weekly compensation, except as otherwise
pro-
vided in this section, in a total sum to all such dependents, equal
to 662/3%
of the average gross weekly wage of the employee at the time of
the
accident, computed as provided in K.S.A. 44-511 and amendments
thereto, but in no event shall such weekly benefits exceed, nor be
less
than, the maximum and minimum weekly benefits provided in K.S.A.
44-
510c and amendments thereto, subject to the following:

(1) If the employee leaves a surviving legal spouse or a wholly
de-
pendent child or children, or both, who are eligible for benefits
under
this section, then all death benefits shall be paid to such
surviving spouse

614 1997 Session
Laws of Kansas Ch.
125

or children, or both, and no benefits shall be paid to any other
wholly or
partially dependent persons.

(2) A surviving legal spouse shall be paid compensation benefits
for
life or until remarriage, except as otherwise provided in this
section.

(3) Any wholly dependent child of the employee shall be paid
com-
pensation, except as otherwise provided in this section, until such
de-
pendent child becomes 18 years of age, except that any such
dependent
child who is not physically or mentally capable of earning wages in
any
type of substantial and gainful employment, or who is enrolled as a
full-
time student in an accredited institution of higher education or
vocational
education shall be paid compensation until such dependent child
be-
comes 23 years of age.

(4) If the employee leaves no legal spouse or dependent
children
eligible for benefits under this section but leaves other
dependents wholly
dependent upon the employee's earnings, such other dependents
shall
receive weekly compensation benefits as provided in this subsection
until
death, remarriage or so long as such other dependents do not
receive
more than 50% of their support from any other earnings or income
or
from any other source, except that the maximum benefits payable to
all
such other dependents, regardless of the number of such other
depen-
dents, shall not exceed a maximum amount of $18,500.

(b) Upon the remarriage of a surviving legal spouse receiving
com-
pensation under this section, the benefits being paid to such
spouse shall
terminate, except that upon such remarriage 100 weeks of benefits
at the
highest rate paid to such spouse under this section shall be paid
to such
spouse in one lump sum, except that such lump-sum payment shall
be
subject to the maximum amount of compensation payable under this
sec-
tion as prescribed by subsection (h).

(c) Where the employee leaves a surviving legal spouse and
depen-
dent children who were wholly dependent upon the employee's
earnings
and are eligible for benefits under this section 1/2 of the maximum
weekly
benefits payable shall be apportioned to such spouse and 1/2 to
such de-
pendent children.

(d) If an employee does not leave any dependents who were
wholly
dependent upon the employee's earnings at the time of the accident
but
leaves dependents, other than a spouse or children, in part
dependent on
the employee's earnings, such percentage of a sum equal to three
times
the employee's average yearly earnings but not exceeding $18,500
but not
less than $2,500, as such employee's average annual contributions
which
the employee made to the support of such dependents during the
two
years preceding the date of the accident, bears to the employee's
average
yearly earnings during the contemporaneous two-year period, shall
be
paid in compensation to such dependents, in weekly payments as
pro-
vided in subsection (a), not to exceed $18,500 to all such
dependents.

(e) The administrative law judge, except as otherwise provided
in this

Ch. 125 1997
Session Laws of Kansas
615

section, shall have the power and authority to apportion and
reapportion
the compensation allowed under this section, either to wholly
dependent
persons or partially dependent persons, in accordance with the
degree of
dependency as of the date of the accident, except that the weekly
payment
of compensation to any and all dependents shall not exceed the
maximum
weekly benefits provided in subsection (a).

(f) In all cases of death compensable under this section, the
employer
shall pay the reasonable expense of burial not exceeding
$3,300$4,300.

(g) The marriage or death of any dependent shall terminate all
com-
pensation, under this section, to such dependent, but shall not
increase
or decrease the compensation allowed to any other dependents
except
that, upon the marriage or death of the surviving legal spouse or a
de-
pendent child, the compensation payable to such spouse or child
shall be
reapportioned to those, among the surviving legal spouse and
dependent
children, who remain eligible to receive compensation under this
section.

(h) Notwithstanding any other provision in this section to the
con-
trary, the maximum amount of compensation benefits payable under
this
section to any and all dependents by the employer shall not exceed
a total
amount of $200,000 and when such total amount has been paid the
lia-
bility of the employer for any further compensation under this
section to
dependents, other than minor children of the employee, shall cease
ex-
cept that the payment of compensation under this section to any
minor
child of the employee shall continue for the period of the child's
minority
at the weekly rate in effect when the employer's liability is
otherwise
terminated under this subsection and shall not be subject to
termination
under this subsection until such child becomes 18 years of
age.

(i) A surviving spouse shall submit an annual statement to the
em-
ployer and to the director, in such form and containing such
information
relating to eligibility for compensation under this section as may
be re-
quired by rules and regulations of the director. If such spouse
fails to
submit such an annual statement, the employer may notify the
director
of such failure and the director shall notify such spouse of such
failure
by certified mail with return receipt. If such spouse fails to
submit the
annual statement or fails to reasonably provide the required
information
within 30 days after receipt of the notice from the director, all
compen-
sation benefits paid under this section to such spouse shall be
suspended
until such statement is submitted in proper form to the employer
and the
director.

Sec. 6. K.S.A. 44-523 is hereby amended to read as follows:
44-523.
(a) The director, administrative law judge or board shall not be
bound by
technical rules of procedure, but shall give the parties reasonable
oppor-
tunity to be heard and to present evidence, insure the employee and
the
employer an expeditious hearing and act reasonably without
partiality.

(b) Whenever a party files an application for hearing pursuant
to

616 1997 Session
Laws of Kansas Ch.
125

K.S.A. 44-534 and amendments thereto, the matter shall be
assigned to
an administrative law judge for hearing and the administrative law
judge
shall set a terminal date to require the claimant to submit all
evidence in
support of the claimant's claim no later than 30 days after the
first full
hearing before the administrative law judge and to require the
respondent
to submit all evidence in support of the respondent's position no
later
than 30 days thereafter. An extension of the foregoing time
limits shall be
granted if all parties agree. An extension of the foregoing
time limits mayalso be granted:

(1) If all parties agree;

(2)(1) If the employee is being paid
temporary or permanent total
disability compensation;

(3)(2) for medical examination of the
claimant if the party requesting
the extension explains in writing to the administrative law judge
facts
showing that the party made a diligent effort but was unable to
have a
medical examination conducted prior to the submission of the case
by the
claimant but then only if the examination appointment was set and
notice
of the appointment sent prior to submission by the claimant;
or

(4)(3) on application for good cause
shown.

(c) When all parties have submitted the case to an
administrative law
judge for an award, the administrative law judge shall issue an
award
within 30 days. The administrative law judge shall not stay a
decision due
to the absence of a submission letter. When the award is not
entered in
30 days, any party to the action may notify the director that an
award is
not entered and the director shall assign the matter to an
assistant director
or to a special administrative law judge who shall enter an award
forthwith
based on the evidence in the record, or the director, on the
director's
own motion, may remove the case from the administrative law judge
who
has not entered an award within 30 days following submission by the
party
and assign it to an assistant director or to a special
administrative law
judge for immediate decision based on the evidence in the
record.

(d) Not less than 10 days prior to the first full hearing before
an
administrative law judge, the administrative law judge shall
conduct a
prehearing settlement conference for the purpose of obtaining
stipula-
tions from the parties, determining the issues and exploring the
possibility
that the parties may resolve those issues and reach a settlement
prior to
the first full hearing.

Sec. 7. K.S.A. 1996 Supp. 44-532 is hereby amended to read as
fol-
lows: 44-532. (a) Where the payment of compensation of the
employee
or the employee's dependents is insured by a policy or policies, at
the
expense of the employer, or the employer is a member of a
qualified
group-funded workers compensation pool, the insurer or the
qualified
group-funded workers compensation pool shall be subrogated to
the
rights and duties under the workers compensation act of the
employer so

Ch. 125 1997
Session Laws of Kansas
617

far as appropriate, including the immunities provided by K.S.A.
44-501
and amendments thereto.

(b) Every employer shall secure the payment of compensation to
the
employer's employees by insuring in one of the following ways: (1)
By
insuring and keeping insured the payment of such compensation with
an
insurance carrier authorized to transact the business of workers
compen-
sation insurance in the state of Kansas; (2) by showing to the
director that
the employer carries such employer's own risk and is what is known
as a
self-insurer and by furnishing proof to the director of the
employer's
financial ability to pay such compensation for the employer's self;
(3) by
maintaining a membership in a qualified group-funded workers
compen-
sation pool. The cost of carrying such insurance or risk shall be
paid by
the employer and not the employee.

(c) The knowing and intentional failure of an employer to secure
the
payment of workers compensation to the employer's employees as
re-
quired in subsection (b) of this section is a class A
misdemeanor.

(d) In addition, whenever the director has reason to believe
that any
employer has engaged or is engaging in the knowing and intentional
fail-
ure to secure the payment of workers compensation to the
employer's
employees as required in subsection (b) of this section, the
director shall
issue and serve upon such employer a statement of the charges
with
respect thereto and shall conduct a hearing in accordance with the
Kansas
administrative procedure act, wherein the employer may be liable to
the
state for a civil penalty in an amount equal to twice the annual
premium
the employer would have paid had such employer been insured or
$25,000, whichever amount is greater.

(e) Any civil penalty imposed or final action taken under this
section
shall be subject to review in accordance with the act for judicial
review
of agency actions in the district court of Shawnee county.

(f) All moneys received under this section for costs assessed or
mon-
etary penalties imposed shall be deposited in the state treasury
and cred-
ited to the workers compensation fund.

(g) (1) Every insurance carrier writing workers' compensation
insur-
ance for any employment covered under the workers compensation
act
shall file, with the director or the director's designee,
written notice of
the issuance, nonrenewal or cancellation of a policy or contract of
insur-
ance, or any endorsement, providing workers compensation
coverage,
within 10 days after such issuance, nonrenewal or cancellation.
Every such
insurance carrier shall file, with the director, written notice of
all such
policies, contracts and endorsements in force on the effective date
of this
act.

(2) Every employer covered by the workers compensation act who
is
a qualified self-insurer shall give written notice to the director
or the
director's designee, if such employer changes from a
self-insurer status to
insuring through an insurance carrier or by maintaining a
membership in

618 1997 Session
Laws of Kansas Ch.
125

a qualified group-funded workers compensation pool, such notice
to be
given within 10 days after the effective date of such change. Every
self-
insurer shall file with the director annually a report verifying
the em-
ployer's continuing ability to pay compensation to the employer's
em-
ployees.

(3) Every employer covered by the workers compensation act who
is
a member of a qualified group-funded workers compensation pool
shall
give written notice to the director or the director's
designee, if such em-
ployer changes from a group-funded workers compensation pool to
in-
suring through an insurance carrier or becoming a self-insurer,
such no-
tice to be given within 10 days after the effective date of such
change.

(4) The mailing of any written notice or report required by this
sub-
section (d) in a stamped envelope within the prescribed time shall
comply
with the requirements of this subsection.

(5) The director shall provide by regulation for the forms of
written
notices and reports required by this subsection (d).

(h) As used in this section, ``qualified group-funded workers
com-
pensation pool'' means any qualified group-funded workers
compensation
pool under K.S.A. 44-581 through 44-591 and amendments thereto
or
any group-funded pool under the Kansas municipal group-funded
pool
act which includes workers compensation and employers' liability
under
the workers compensation act.

(i) A private firm shall not be eligible to apply to become a
self-insurer
unless it has been in continuous operation for at least five years
or is
purchasing an existing self-insured Kansas firm, plant or facility
and the
operation of the purchased firm, plant or facility: (1) Has been in
contin-
uous operation in Kansas for at least 10 years; (2) has generated
an after-
tax profit of at least $1,000,000 annually for the preceding three
consec-
utive years; and (3) has a ratio of debt to equity of not greater
than 3.5
to 1. As used in this subsection, ``debt'' means the sum of
long-term
borrowing maturing in excess of one year plus the current portion
of long-
term borrowing plus short-term financial institution borrowing plus
com-
mercial paper borrowing, and ``equity'' means the sum of the book
value
of stock plus paid-in capital plus retained earnings. The method
for cal-
culating the amount of security required of self-insureds shall be
reviewed
by an actuary every five years, beginning in fiscal year 1997. The
costs
for these actuarial studies shall be paid from the workers
compensation
fee fund.

(j) A corporation or other entity whose current identity is
attributable
to a merger or other transformation whereby the whole or a
substantial
part of a previous entity's assets and income have been transferred
to it,
and its liabilities have not increased beyond the financial review
require-
ments of the director, which qualified under its previous identity
as a self-
insurer under other provisions of this statute, and amendments
thereto,
may apply for renewal as a self-insurer under its new name. The
director

Ch. 125 1997
Session Laws of Kansas
619

may grant the application for renewal if satisfied that the
new entity meets
all necessary financial criteria for renewal that would have been
applied
to the previous self-insured entity. An application under these
provisions
shall be limited to an entity seeking renewal based upon the prior
self-
insured status of another entity or entities.

Sec. 8. K.S.A. 44-534 is hereby amended to read as follows:
44-534.
(a) Whenever the employer, worker, Kansas workers compensation
fund
or insurance carrier cannot agree upon the worker's right to
compensation
under the workers compensation act or upon any issue in regard to
work-
ers compensation benefits due the injured worker thereunder, the
em-
ployer, worker or insurance carrier may apply in writing to the
director
for a determination of the benefits or compensation due or claimed
to be
due. The application shall be in the form prescribed by the rules
and
regulations of the director and shall set forth the substantial and
material
facts in relation to the claim. Whenever an application is filed
under this
section, the matter shall be assigned to an administrative law
judge. The
director shall forthwith mail a certified copy of the application
to the
adverse party. The administrative law judge shall proceed, upon due
and
reasonable notice to the parties, which shall not be less than 20
days, to
hear all evidence in relation thereto and to make findings
concerning the
amount of compensation, if any due to the worker.

(b) No proceeding for compensation shall be maintained under
the
workers compensation act unless an application for a hearing is on
file in
the office of the director within three years of the date of the
accident or
within two years of the date of the last payment of compensation,
which-
ever is later.

Sec. 9. K.S.A. 1996 Supp. 44-534a is hereby amended to read
as
follows: 44-534a. (a) (1) After an application for a hearing has
been filed
pursuant to K.S.A. 44-534 and amendments thereto, the employee or
the
employer may make application for a preliminary hearing, in such
form
as the director may require, on the issues of the furnishing of
medical
treatment and the payment of temporary total disability
compensation.
At least seven days prior to filing an application for a
preliminary hearing,
the applicant shall give written notice to the adverse party of the
intent
to file such an application. Such notice of intent shall contain a
specific
statement of the benefit change being sought that is to be the
subject of
the requested preliminary hearing. If the parties do not agree to
the
change of benefits within the seven-day period, the party seeking a
change
in benefits may file an application for preliminary hearing which
shall be
accompanied by a copy of the notice of intent and the applicant's
certi-
fication that the notice of intent was served on the adverse party
or that
party's attorney and that the request for a benefit change has
either been
denied or was not answered within seven days after service. Copies
of
medical reports or other evidence which the party intends to
produce as

620 1997 Session
Laws of Kansas Ch.
125

exhibits supporting the change of benefits shall be included
with the ap-
plication. The director shall assign the application to an
administrative
law judge who shall set the matter for a preliminary hearing and
shall give
at least seven days' written notice by mail to the parties of the
date set
for such hearing.

(2) Such preliminary hearing shall be summary in nature and
shall be
held by an administrative law judge in any county designated by the
ad-
ministrative law judge, and the administrative law judge shall
exercise
such powers as are provided for the conduct of full hearings on
claims
under the workers compensation act. Upon a preliminary finding that
the
injury to the employee is compensable and in accordance with the
facts
presented at such preliminary hearing, the administrative law judge
may
make a preliminary award of medical compensation and temporary
total
disability compensation to be in effect pending the conclusion of a
full
hearing on the claim, except that if the employee's entitlement to
medical
compensation or temporary total disability compensation is disputed
or
there is a dispute as to the compensability of the claim, no
preliminary
award of benefits shall be entered without giving the employer the
op-
portunity to present evidence, including testimony, on the disputed
is-
sues. A finding with regard to a disputed issue of whether the
employee
suffered an accidental injury, whether the injury arose out of and
in the
course of the employee's employment, whether notice is given or
claim
timely made, or whether certain defenses apply, shall be considered
ju-
risdictional, and subject to review by the board. Such review by
the board
shall not be subject to judicial review. If an appeal from a
preliminary
order is perfected under this section, such appeal shall not stay
the pay-
ment of medical compensation and temporary total disability
compen-
sation from the date of the preliminary award. If temporary total
com-
pensation is awarded, such compensation may be ordered paid from
the
date of filing the application, except that if the administrative
law judge
finds from the evidence presented that there were one or more
periods
of temporary total disability prior to such filing date, temporary
total com-
pensation may be ordered paid for all periods of temporary total
disability
prior to such date of filing. The decision in such preliminary
hearing shall
be rendered within five days of the conclusion of such hearing.
Except
as provided in this section, no such preliminary findings or
preliminary
awards shall be appealable by any party to the proceedings, and the
same
shall not be binding in a full hearing on the claim, but shall be
subject to
a full presentation of the facts.

(b) If compensation in the form of medical benefits or
temporary
total disability benefits has been paid by the employer or the
employer's
insurance carrier either voluntarily or pursuant to an award
entered under
this section and, upon a full hearing on the claim, the amount of
com-
pensation to which the employee is entitled is found to be less
than the
amount of compensation paid or is totally disallowed, the employer
and

Ch. 125 1997
Session Laws of Kansas
621

the employer's insurance carrier shall be reimbursed from the
workers
compensation fund established in K.S.A. 44-566a and amendments
thereto, for all amounts of compensation so paid which are in
excess of
the amount of compensation the employee is entitled to less any
amount
deducted from additional disability benefits due the employee
pursuant
to subsection (c) of K.S.A. 44-525, and amendments thereto, as
deter-
mined in the full hearing on the claim. The director shall
determine the
amount of compensation paid by the employer or insurance carrier
which
is to be reimbursed under this subsection, and the director shall
certify
to the commissioner of insurance the amount so determined. Upon
re-
ceipt of such certification, the commissioner of insurance shall
cause pay-
ment to be made to the employer or the employer's insurance carrier
in
accordance therewith. No reimbursement shall be certified unless
the re-
quest is made by the employer or employer's insurance carrier
within one
year of the final award.

Sec. 10. K.S.A. 44-536 is hereby amended to read as follows:
44-536.
(a) With respect to any and all proceedings in connection with any
initial
or original claim for compensation, no claim of any attorney for
services
rendered in connection with the securing of compensation for an
em-
ployee or the employee's dependents, whether secured by
agreement,
order, award or a judgment in any court shall exceed
(1) a reasonable
amount for such services or (2) the amount equal to the
total of 25% of
that portion of total compensation recovered and paid which is less
than
$10,001, 20% of that portion of total compensation recovered and
paid
which is greater than $10,000 and less than $20,001, and 15% of
that
portion of the total amount of the compensation recovered and
paid
which is in excess of $20,00025% of the amount of
compensation recov-
ered and paid, whichever is less, in addition to actual
expenses incurred,
and subject to the other provisions of this section. Except as
hereinafter
provided in this section, in death cases, total disability and
partial disability
cases, the amount of attorney fees shall not be based upon
compensationexceed 25% of the sum which would
be due under the workers compen-
sation act beyond 415 weeks of permanent total disability based
upon the
employee's average gross weekly wage prior to the date of the
accident
and subject to the maximum weekly benefits provided in K.S.A.
44-510c
and amendments thereto.

(b) All attorney fees in connection with the initial or original
claim
for compensation shall be fixed pursuant to a written contract
between
the attorney and the employee or the employee's dependents, which
shall
be subject to approval by the director in accordance with this
section.
Every attorney, whether the disposition of the original claim is by
agree-
ment, settlement, award, judgment or otherwise, shall file the
attorney
contract with the director for review in accordance with this
section. The
director shall review each such contract and the fees claimed
thereunder

622 1997 Session
Laws of Kansas Ch.
125

as provided in this section and shall approve such contract and
fees only
if both are in accordance with all provisions of this section. Any
claims
for attorney fees not in excess of the limits provided in this
section and
approved by the director shall be enforceable as a lien on the
compen-
sation due or to become due. The director shall specifically and
individ-
ually review each claim of an attorney for services rendered under
the
workers compensation act in each case of a settlement agreement
under
K.S.A. 44-521 and amendments thereto or a lump-sum payment
under
K.S.A. 44-531 and amendments thereto as to the reasonableness
thereof.
In reviewing the reasonableness of such claims for attorney fees,
the di-
rector shall consider the other provisions of this section and the
following:

(1) The written offers of settlement made prior to
representationre-
ceived by the employee prior to execution of a written contract
between
the employee and the attorney; the employer shall attach to the
settlement
worksheet copies of any written offers of settlement which were
sent to
the employee before the employer was aware that the employee had
hired
an attorney;

(2) the time and labor required, the novelty and difficulty of
the ques-
tions involved and the skill requisite to perform the legal
services prop-
erly;

(3) the likelihood, if apparent to the employee or the
employee's de-
pendents, that the acceptance of the particular case will preclude
other
employment by the attorney;

(4) the fee customarily charged in the locality for similar
legal serv-
ices;

(5) the amount of compensation involved and the results
obtained;

(6) the time limitations imposed by the employee, by the
employee's
dependents or by the circumstances;

(7) the nature and length of the professional relationship with
the
employee or the employee's dependents; and

(8) the experience, reputation and ability of the attorney or
attorneys
performing the services.

(c) No attorney fees shall be charged with respect to
compensation
for medical expenses, except where an allowance is made for
proposed
or future treatment as a part of a compromise settlement. No
attorney
fees shall be charged with respect to vocational rehabilitation
benefits.

(d) No attorney fees shall be charged in connection with any
tem-
porary total disability compensation unless the payment of such
compen-
sation in the proper amount is refused, or unless such compensation
is
terminated by the employer and the payment of such compensation
is
obtained or reinstated by the efforts of the attorney, whether by
agree-
ment, settlement, award or judgment.

(e) With regard to any claim where there is no dispute as to any
of
the material issues prior to representation of the claimant or
claimants
by an attorney, or where the amount to be paid for compensation
does

Ch. 125 1997
Session Laws of Kansas
623

not exceed the written offer made to the claimant or
claimants by the
employer prior to representation byexecution
of a written contract be-
tween the employee and an attorney, the fees to any such
attorney shall
not exceed either the sum of $250 or a reasonable fee for the time
actually
spent by the attorney, as determined by the director, whichever is
greater,
exclusive of reasonable attorney fees for any representation by
such at-
torney in reference to any necessary probate proceedings. With
regard to
any claim where the amount to be paid for compensation does
exceed
the written offer made prior to representation, fees for services
rendered
by an attorney shall not exceed the lesser of (1) a reasonable
amount for
such services or; (2) thean amount equal to the total of 25%50% of that
portion of the amount of compensation recovered and paid, which is
in
excess of the amount of compensation offered to the employee by
the
employer prior to the execution of a written contract between
the em-
ployee and the attorney; orattorney's entry of
appearance in the claim
and which is less than $10,001, 20% of that portion of the amount
of
compensation recovered and paid, which is in excess of the amount
of
compensation offered to the employee prior to the attorney's entry
of
appearance in the claim and which is more than $10,000 and less
than
$20,001 and 15% of that portion of the amount of compensation
recov-
ered and paid, which is in excess of the amount of compensation
offered
to the employee prior to the attorney's entry of appearance in the
claim
and which is in excess of $20,000, as specified in subsection
(a).(3) 25%
of the total amount of compensation recovered and paid as described
in
subsection (a).

(f) All attorney fees for representation of an employee or the
em-
ployee's dependents shall be only recoverable from compensation
actually
paid to such employee or dependents, except as specifically
provided
otherwise in subsection (g) and (h).

(g) In the event any attorney renders services to an employee or
the
employee's dependents, subsequent to the ultimate disposition of
the
initial and original claim, and in connection with an application
for review
and modification, a hearing for additional medical benefits, an
application
for penalties or otherwise, such attorney shall be entitled to
reasonable
attorney fees for such services, in addition to attorney fees
received or
which the attorney is entitled to receive by contract in connection
with
the original claim, and such attorney fees shall be awarded by the
director
on the basis of the reasonable and customary charges in the
locality for
such services and not on a contingent fee basis. If the services
rendered
under this subsection by an attorney result in an additional award
of dis-
ability compensation, the attorney fees shall be paid from such
amounts
of disability compensation. If such services involve no
additional award
of disability compensation, but result in an additional
award of medical
compensation, penalties, or other benefits, the director shall
fix the proper
amount of such attorney'sattorney fees in
accordance with this subsection

624 1997 Session
Laws of Kansas Ch.
125

and such fees shall be paid by the employer or the workers
compensation
fund, if the fund is liable for compensation pursuant to K.S.A.
44-567 and
amendments thereto, to the extent of the liability of the fund.
If the
services rendered herein result in a denial of additional
compensation, the
director may authorize a fee to be paid by the
respondent.

(h) Any and all disputes regarding attorney fees, whether such
dis-
putes relate to which of one or more attorneys represents the
claimant
or claimants or is entitled to the attorney fees, or a division of
attorney
fees where the claimant or claimants are or have been represented
by
more than one attorney, or any other disputes concerning attorney
fees
or contracts for attorney fees, shall be heard and determined by
the ad-
ministrative law judge, after reasonable notice to all interested
parties and
attorneys.

(i) After reasonable notice and hearing before the
administrative law
judge, any attorney found to be in violation of any provision of
this section
shall be required to make restitution of any excess fees
charged.

Sec. 11. K.S.A. 44-550b is hereby amended to read as follows:
44-
550b. (a) All records provided to be maintained under K.S.A. 44-550
and
amendments thereto and not withstanding the provisions of K.S.A.
45-
215, et seq., and amendments thereto, shall be open to public
inspection,
except that:

(1) Records relating to financial information submitted
by an em-
ployer to qualify as a self-insurer pursuant to K.S.A 44-532 and
amend-
ments thereto and;

(2) records which relate to utilization review or peer
review con-
ducted pursuant to K.S.A. 44-510 and amendments thereto shall not
be
disclosed except to the health care provider and as
otherwise specifically
provided by the workers compensation
act.;

(B) to the employer, its insurance carrier or its
representative, from
whom a worker seeks workers compensation benefits;

(C) to the division of workers compensation for its own
records for
its purposes;

(D) to federal or state governmental agencies for purposes of
fraud
and abuse investigations;

(E) to an employer in connection with any application for
employ-
ment to an employer, its insurance carrier or representatives
providing
(i) a conditional offer of employment has been made and (ii) the
request
for records includes a signed release by the individual, identifies
the job

Ch. 125 1997
Session Laws of Kansas
625

conditionally offered by the employer and is submitted in
writing, either
by mail or electronic means. Requests relating to an individual
under this
subsection shall be considered a record to be maintained and open
to
public inspection under K.S.A. 44-550 and amendments
thereto;

(F) to the workers compensation fund for its own purposes;
and

(G) to the worker upon written release by the
worker.

(b) This section shall be part of and supplemental to the
workers
compensation act.

Sec. 12. K.S.A. 1996 Supp. 44-551 is hereby amended to read
as
follows: 44-551. (a) The duties of the assistant directors of
workers com-
pensation shall include but not be limited to acting in the
capacity of an
administrative law judge.

(b) (1) Administrative law judges shall have power to
administer
oaths, certify official acts, take depositions, issue subpoenas,
compel the
attendance of witnesses and the production of books, accounts,
papers,
documents and records to the same extent as is conferred on the
district
courts of this state, and may conduct an investigation, inquiry or
hearing
on all matters before the administrative law judges. All
acts, findingsfinal
orders, awards, decisions, rulings or
modifications of findings or awards,
or preliminary awards under K.S.A. 44-534a and amendments
thereto
made by an administrative law judge shall be subject to review by
the
board upon written request of any interested party within 10 days.
Inter-
mediate Saturdays, Sundays and legal holidays shall be excluded in
the
time computation. Review by the board shall be a prerequisite
to judicial
review as provided for in K.S.A. 44-556 and amendments thereto. On
any
such review, the board shall have authority to grant or refuse
compen-
sation, or to increase or diminish any award of compensation or to
remand
any matter to the administrative law judge for further proceedings.
The
orders of the board under this subsection shall be issued within 30
days
from the date arguments were presented by the parties.

(2) (A) If an administrative law judge has entered a
preliminary
award under K.S.A. 44-534a and amendments thereto, a review by
the
board shall not be conducted under this section unless it is
alleged that
the administrative law judge exceeded the administrative law
judge's ju-
risdiction in granting or denying the relief requested at the
preliminary
hearing. Such an appeal from a preliminary award may be heard
and
decided by a single member of the board. Members of the board
shall
hear such preliminary appeals on a rotating basis and the
individual board
member who decides the appeal shall sign each such decision. The
orders
of the board on any acts, findings, awards, decisions,
rulings or modifi-
cations of findings or awardsunder this subsection
shall be issued within
30 days from the date arguments were presented by the
parties.

(B) If an order on review is not issued by the board within the
ap-
plicable time period prescribed by subsection
(b)(2)(A)(1), medical com-

626 1997 Session
Laws of Kansas Ch.
125

pensation and any disability compensation as provided in the
award of
the administrative law judge shall be paid commencing with the
first day
after such time period and shall continue to be paid until the
order of
the board is issued, except that no payments shall be made under
this
provision for any period before the first day after such time
period. Noth-
ing in this section shall be construed to limit or restrict any
other remedies
available to any party to a claim under any other statute.

(C) In any case in which the final award of an administrative
law judge
is appealed to the board for review under this section and in which
the
compensability is not an issue to be decided on review by the
board,
medical compensation shall be payable in accordance with the award
of
the administrative law judge and shall not be stayed pending such
review.
The employee may proceed under K.S.A. 44-534a and amendments
thereto and may have a hearing in accordance with that statute to
enforce
the provisions of this subsection.

(c) Each assistant director and each administrative law judge or
spe-
cial administrative law judge shall be allowed all reasonable and
necessary
expenses actually incurred while in the actual discharge of
official duties
in administering the workers compensation act, but such expenses
shall
be sworn to by the person incurring the same and be approved by
the
secretary.

(d) In case of emergency the director may appoint special local
ad-
ministrative law judges and assign to them the examination and
hearing
of any designated case or cases. Such special local administrative
law
judges shall be attorneys and admitted to practice law in the state
of
Kansas and shall, as to all cases assigned to them, exercise the
same pow-
ers as provided by this section for the regular administrative law
judges.
Special local administrative law judges shall receive a fee
commensurate
with the services rendered as fixed by rules and regulations
adopted by
the director. The fees prescribed by this section prior to the
effective date
of this act shall be effective until different fees are fixed by
such rules
and regulations.

(e) All special local administrative law judge's fees and
expenses, with
the exception of settlement hearings, shall be paid from the
workers com-
pensation administration fee fund, as provided in K.S.A. 74-712
and
amendments thereto. Where there are no available funds or where
the
special local administrative law judge conducted a settlement
hearing, the
fees shall be taxed as costcosts in
each case heard by such special local
administrative law judge and when collected shall be paid directly
to such
special local administrative law judge by the party charged with
the pay-
ment of the same.

(f) Except as provided for judicial review under K.S.A. 44-556
and
amendments thereto, the decisions and awards of the board shall be
final.

Sec. 13. K.S.A. 1996 Supp. 44-555c is hereby amended to read
as

Ch. 125 1997
Session Laws of Kansas
627

follows: 44-555c. (a) There is hereby established the workers
compen-
sation board. The board shall have exclusive jurisdiction to review
all
decisions, findings, orders and awards of compensation of
administrative
law judges under the workers compensation act. The review by the
board
shall be upon questions of law and fact as presented and shown by
a
transcript of the evidence and the proceedings as presented, had
and
introduced before the administrative law judge. The board shall be
within
the division of workers compensation of the department of human
re-
sources and all budgeting, personnel, purchasing and related
manage-
ment functions of the board shall be administered under the
supervision
and direction of the secretary of human resources. The board shall
consist
of five members who shall be appointed by the secretary in
accordance
with this section and who shall each serve for a term of four
years, except
as provided for the first members appointed to the board under
subsec-
tion (f).

(b) Each board member shall be an attorney regularly admitted
to
practice law in Kansas for a period of at least seven years and
shall have
engaged in the active practice of law during such period as a
lawyer, judge
of a court of record or any court in Kansas or a full-time teacher
of law
in an accredited law school, or any combination of such types of
practice.

(c) Each board member shall receive an annual salary in an
amount
equal to the salary prescribed by law for a district judge, except
that the
member who is the chairperson of the workers compensation board
shall
receive an annual salary in an amount equal to the salary
prescribed for
a district judge designated as administrative judge of a district
court of
Kansas. The board members shall devote full time to the duties of
such
office and shall not engage in the private practice of law during
their term
of office. No board member may receive additional compensation
for
official services performed by the board member. Each board
member
shall be reimbursed for expenses incurred in the performance of
such
official duties under the same circumstances and to the same extent
as
judges of the district court are reimbursed for such
expenses.

(d) Applications for membership on the board shall be submitted
to
the director of workers compensation. The director shall determine
if an
applicant meets the qualifications for membership on the board
pre-
scribed in subsection (b). Qualified applicants for the board will
be sub-
mitted by the director to the workers compensation board
nominating
committee for consideration.

(e) There is hereby established the workers compensation
board
nominating committee which shall be composed of two members ap-
pointed as follows: The Kansas AFL-CIO and the Kansas chamber
of
commerce and industry shall each select one representative to serve
on
the workers compensation board nominating committee and shall
give
written notice of the selection to the secretary who shall appoint
such
representatives to the committee. In the event of a vacancy
occurring for

628 1997 Session
Laws of Kansas Ch.
125

any reason on the nominating committee, the respective member
shall
be replaced by the appointing organization with written notice of
the
appointment to the secretary of human resources within 30 days of
such
vacancy.

(f) (1) Upon being notified of any vacancy on the board or of
the
need to appoint a member pro tem under subsection (i), the
nominating
committee shall consider all qualified applicants submitted by the
director
for the vacant position on the board or the member pro tem position
and
nominate a person qualified therefor. The nominating committee
shall
be required to reach unanimous agreement on any nomination to
the
board. With respect to each person nominated, the secretary either
shall
accept and appoint the person nominated by the nominating
committee
to the position on the board for which the nomination was made or
shall
reject the nomination and request the nominating committee to
nominate
another person for that position. Upon receipt of any such request
for
the nomination of another person, the nominating committee shall
nom-
inate another person for that position in the same manner.

(2) The first members of the board established by this section
are
hereby appointed as follows: Each person who was a member of
the
workers compensation board which was in existence on January 12,
1995,
is hereby appointed, effective January 13, 1995, as a member of the
board
established by this section. The term of office of each person so
appointed
as a member of the board established by this section is for the
period
equal to the remainder of the term of office such person had as of
January
12, 1995, as a member of the workers compensation board which was
in
existence on January 12, 1995.

(3) Each member of the board shall hold office for the term of
the
appointment and until the successor shall have been appointed.
Succes-
sors to such members shall be appointed for terms of four
years.

(4) If a vacancy should occur on the board during the term of a
mem-
ber, the nominating committee shall nominate an individual from
the
qualified applicants submitted by the director to complete the
remainder
of the unexpired portion of the term. With respect to each person
so
nominated, the secretary either shall accept and appoint the person
nom-
inated to the board or shall reject the nomination and request the
nom-
inating committee to nominate another person for the position.
Upon
receipt of any such request for the nomination of another person,
the
nominating committee shall nominate another person for the position
in
the same manner.

(g) Following the completion of a term, board members who wish
to
be considered for reappointment to the board shall be deemed to
have
met the qualification requirements for selection to the board and
shall
be considered for renomination by the workers compensation board
nom-
inating committee.

Ch. 125 1997
Session Laws of Kansas
629

(h) The members of the board shall annually elect one member
to
serve as chairperson.

(i) If illness or other temporary disability of a member of the
board
will not permit the member to serve during a case or in any case in
which
a member of the board must be excused from serving because of a
conflict
or is otherwise disqualified with regard to such case, the director
shall
notify the workers compensation nominating committee of the need
to
appoint a member pro tem. Upon receipt of such notice, the
committee
shall act as soon as possible and nominate a qualified person to
serve as
member pro tem in such case in accordance with subsection (f).
Each
member pro tem shall receive compensation at the same rate as a
member
of the board receives, prorated for the dayshours of actual service as a
member pro tem and shall receive expenses under the same
circum-
stances and to the same extent as a member of the board receives.
Each
member pro tem shall have all the powers, duties and functions of
a
member of the board with regard to the case.

(j) The board shall maintain principal offices in Topeka,
Kansas, and
the board may conduct hearings at a courthouse of any county in
Kansas
or at another location specified by the board. The secretary of
human
resources shall provide a courtroom and other suitable quarters in
To-
peka, Kansas, for the use of the board and its staff. When the
board
conducts hearings at any location other than in Topeka, Kansas, the
di-
rector shall make suitable arrangements for such hearings. Subject
to the
provisions of appropriation acts, the director shall provide such
supplies
and equipment and shall appoint such support personnel as may be
nec-
essary for the board to fulfill the duties imposed by this act,
subject to
approval by the secretary.

(k) For purposes of hearing cases, the board may sit together or
in
panels of two members or more, designated by the chairperson of
the
board, except that an appeal from a preliminary award entered
under
K.S.A. 44-534a and amendments thereto may be heard by a panel of
one
member designated by the chairperson. All members of the board
shall
determine each matter before the board. All decisions, reviews and
de-
terminations by the board shall be approved in writing by at least
three
board members. Whenever the board enters a final order in any
pro-
ceeding, the board shall make written findings of fact and
conclusions of
law forming the basis of the board's determination and final order.
The
findings of fact and conclusions of law of the board shall be made
a part
of the final order. The board shall mail a copy of the final order
of the
board to all parties to the proceeding within three days following
the
issuance of the final order.

Sec. 14. K.S.A. 44-557a is hereby amended to read as follows:
44-
557a. (a) The director shall: (1) Compile and publish statistics to
deter-
mine the causation of compensable disabilities in the state of
Kansas and

630 1997 Session
Laws of Kansas Ch.
125

(2) compile and maintain a database of information on claim
character-
istics and costs related to open and closed claims, in order to
determine
the effectiveness of the workers compensation act to provide
adequate
indemnity, medical and vocational rehabilitation compensation to
injured
workers and to return injured workers to remunerative employment.
The
commissioner of insurance shall cooperate with the director and
shall
make available any information which will assist the director in
compiling
such information and statistics and may contract with the
director and
the secretary of the department of health and environment to
collect such
information as the director deems necessary.

(b) A primary source of such information and statistics
shall be the
compliance of employers, group-funded workers compensation pools
and
insurance carriers in reporting of all accidents which are required
to be
reported under the workers compensation act. Each
self-insured em-
ployer, group-funded workers compensation pool, insurance carrier
and
vocational rehabilitation provider shall submit to the director the
dispo-
sition of a statistically significant sample of open and closed
claims under
the act and, in connection with the closing of each claim in which
pay-
ments were made, the following: (1) The dates, time intervals,
amounts
and types of weekly disability payments made, (2) the dates and
gross
amounts of payments made to each type of medical compensation
pro-
vider, (3) the dates and type of service for which payment was made
and
the gross amounts paid to each vocational rehabilitation provider,
and (4)
the dates and types of fees paid as claim costs. The
director shall prescribe
by rules and regulations such formats, computer media and methods
as
may be necessary to provide information to the director on a
periodic
basis.Each self-insured employer, group-funded workers
compensation
pool, insurance carrier, vocational rehabilitation provider, health
care
provider or health care facility shall submit medical information,
by pro-
cedure, charge and zip code of the provider in order to set the
maximum
medical fee schedule. The director of workers compensation may
adopt
and promulgate such rules and regulations as the director deems
neces-
sary for the purposes of administering and enforcing the provisions
of this
section.

(c) The director may contract for professional actuarial or
statistical
services to provide assistance in determining the types of
information and
the methods of selecting and analyzing information as may be
necessary
for the director to conduct studies of open and closed claims under
the
workers compensation act and to enable the director to make valid
sta-
tistical conclusions as to the distribution of costs of workers
compensation
benefits.

(d) The director shall obtain such office and computer
equipment
and employ such additional clerical help as the director deems
necessary
to gather such information and prepare such statistics.

Ch. 125 1997
Session Laws of Kansas
631

Sec. 15. K.S.A. 1996 Supp. 44-566a is hereby amended to read
as
follows: 44-566a. (a) There is hereby created in the state treasury
the
workers compensation fund. The commissioner of insurance shall be
re-
sponsible for administering the workers compensation fund, and all
pay-
ments from the workers compensation fund shall be upon warrants of
the
director of accounts and reports issued pursuant to vouchers
approved
by the commissioner of insurance or a person or persons designated
by
the commissioner. The commissioner of insurance annually shall
report
to the governor and the legislature the receipts and disbursements
from
the workers compensation fund during the preceding fiscal
year.

(b) (1) On June 1 of each year, the commissioner of insurance
shall
impose an assessment against all insurance carriers, self-insurers
and
group-funded workers compensation pools insuring the payment of
com-
pensation under the workers compensation act, and the same shall be
due
and payable to the commissioner on the following July 1, the
proceeds of
which shall be credited to the workers compensation fund. The
total
amount of each such assessment shall be equal to an amount
sufficient,
in the opinion of the commissioner of insurance, to pay all
amounts, in-
cluding attorney fees and costs, which may be required to be paid
from
such fund during the current fiscal year, less the amount of the
estimated
unencumbered balance in the workers compensation fund as of the
June
30 immediately preceding the date the assessment is due and
payable
under this section. The total amount of each such assessment shall
be
apportioned among those upon whom it is imposed, such that each
is
assessed an amount that bears the same relation to such total
assessment
as the amount of money paid or payable in workers compensation
claims
by such insurance carrier, self-insurer or group-funded workers
compen-
sation pool in the immediately preceding calendar year bears to all
such
claims paid or payable during such calendar year. The commissioner
of
insurance may establish experience-based rates of assessments under
this
subsection and make adjustments in the assessments imposed under
this
subsection based on the success of accident prevention programs
under
K.S.A. 44-5,104 and amendments thereto and other employer safety
pro-
grams.

(2) The commissioner of insurance shall remit all moneys
received
by or for such commissioner under this subsection to the state
treasurer.
Upon receipt of any such remittance the state treasurer shall
deposit the
entire amount thereof in the state treasury to the credit of the
workers
compensation fund.

(c) (1) Whenever the workers compensation fund may be made
lia-
ble for the payment of any amounts in proceedings under the
workers
compensation act, the commissioner of insurance, in the capacity of
ad-
ministrator of such fund, shall be impleaded in such proceedings
and shall
represent and defend the workers compensation fund. The
commissioner
of insurance shall be deemed impleaded in any such proceedings
when-

632 1997 Session
Laws of Kansas Ch.
125

ever written notice of the proceedings setting forth the nature
of the
liability asserted against the workers compensation fund, is given
to the
commissioner of insurance. The commissioner of insurance may be
made
a party in this manner by any party to the proceedings. A copy of
the
written notice shall be given to the director and to all other
parties to the
proceedings.

(2) The administrative law judge shall dismiss the workers
compen-
sation fund from any proceeding where the administrative law judge
has
determined that there is insufficient evidence to indicate
involvement by
the workers compensation fund.

(3) In any case in which the workers compensation fund has
been
impleaded, if the liability of the fund has not been
established within five
years of the date of the employee filing a written notice of claim,
the
commissioner of insurance may cause to be filed with an
administrative
law judge a motion to dismiss the fund from the case. The
administrative
law judge shall notify counsel of record not less than 10 days
prior to
issuing any order dismissing the fund from a case. The
administrative law
judge shall dismiss the fund from any such case absent a showing by
one
of the parties that the case should be left open due to medical
necessity
or other just causeby the employer or insurance
carrier and where an
award has been entered deciding all of the issues in the employee's
claim
against the employer, but not deciding the issues between the
employer
and the fund, the fund may file an application with the
administrative
law judge requesting that the fund be dismissed from the case with
prej-
udice. The employer shall have a period of six months from the
filing of
the application in which to complete the employer's evidence on the
fund
issues and submit the case to the administrative law judge for
decision.
The fund shall then have a period of 60 days after the submission
of the
employer's evidence to submit its own evidence concerning the fund
issues
in the case. If the employer fails to do so, the administrative law
judge
shall dismiss the fund from the case with prejudice on the judge's
own
motion.

(d) The commissioner of insurance, in the capacity of
administrator
of the workers compensation fund, may make settlements of any
amounts
which may be payable from the workers compensation fund with
regard
to any claim under the workers compensation act, subject to the
approval
of the director.

(e) The workers compensation fund shall be liable for:

(1) Payment of awards to handicapped employees in accordance
with
the provisions of K.S.A. 44-569 and amendments thereto for claims
aris-
ing prior to July 1, 1994;

(2) payment of workers compensation benefits to an employee
who
is unable to receive such benefits from such employee's employer
under
the conditions prescribed by K.S.A. 44-532a and amendments
thereto;

(4) payment of the actual expenses of the commissioner of
insurance
which are incurred for administering the workers compensation
fund,
subject to the provisions of appropriations acts; and

(5) any other payments or disbursements provided by law.

(f) If it is determined that the workers compensation fund is
not liable
as described in subsection (e), attorney fees incurred by the
workers com-
pensation fund may be assessed against the party who has impleaded
the
workers compensation fund other than impleadings pursuant to
K.S.A.
44-532a and amendments thereto.

(g) The commissioner of insurance shall provide for the
implemen-
tation of the workers compensation fund as provided in this section
and
shall be responsible for ensuring the fund's adequacy to meet and
pay
claims awarded against it.

Sec. 16. K.S.A. 44-567 is hereby amended to read as follows:
44-567.
(a) An employer who operates within the provisions of the workers
com-
pensation act and who knowingly employs or retains a handicapped
em-
ployee, as defined in K.S.A. 44-566 and amendments thereto shall
be
relieved of liability for compensation awarded or be entitled to an
appor-
tionment of the costs thereof as follows:

(1) Whenever a handicapped employee is injured or is disabled
or
dies as a result of an injury which occurs prior to July 1, 1994,
and the
administrative law judge awards compensation therefor and finds the
in-
jury, disability or the death resulting therefrom probably or most
likely
would not have occurred but for the preexisting physical or mental
im-
pairment of the handicapped employee, all compensation and
benefits
payable because of the injury, disability or death shall be paid
from the
workers compensation fund; and

(2) subject to the other provisions of the workers compensation
act,
whenever a handicapped employee is injured or is disabled or dies
as a
result of an injury and the administrative law judge finds the
injury prob-
ably or most likely would have been sustained or suffered without
regard
to the employee's preexisting physical or mental impairment but the
re-
sulting disability or death was contributed to by the preexisting
impair-
ment, the administrative law judge shall determine in a manner
which is
equitable and reasonable the amount of disability and proportion of
the
cost of award which is attributable to the employee's preexisting
physical
or mental impairment, and the amount so found shall be paid from
the
workers compensation fund.

(b) In order to be relieved of liability under this section, the
employer
must prove either the employer had knowledge of the preexisting
im-

634 1997 Session
Laws of Kansas Ch.
125

pairment at the time the employer employed the handicapped
employee
or the employer retained the handicapped employee in employment
after
acquiring such knowledge. The employer's knowledge of the
preexisting
impairment may be established by any evidence sufficient to
maintain the
employer's burden of proof with regard thereto. If the employer,
prior
to the occurrence of a subsequent injury to a handicapped employee,
files
with the director a notice of the employment or retention of such
em-
ployee, together with a description of the handicap claimed, such
notice
and description of handicap shall create a presumption that the
employer
had knowledge of the preexisting impairment. If the employer files
a
written notice of an employee's preexisting impairment with the
director
in a form approved by the director therefor, such notice
establishes the
existence of a reservation in the mind of the employer when
deciding
whether to hire or retain the employee.

(c) Knowledge of the employee's preexisting impairment or
handicap
at the time the employer employs or retains the employee in
employment
shall be presumed conclusively if the employee, in connection with
an
application for employment or an employment medical examination
or
otherwise in connection with obtaining or retaining employment with
the
employer, knowingly: (1) Misrepresents that such employee does not
have
such an impairment or handicap; (2) misrepresents that such
employee
has not had any previous accidents; (3) misrepresents that such
employee
has not previously been disabled or compensated in damages or
otherwise
because of any prior accident, injury or disease; (4) misrepresents
that
such employee has not had any employment terminated or
suspended
because of any prior accident, injury or disease; (5) misrepresents
that
such employee does not have any mental, emotional or physical
impair-
ment, disability, condition, disease or infirmity; or (6)
misrepresents or
conceals any facts or information which are reasonably related to
the
employee's claim for compensation.

(d) An employer shall not be relieved of liability for
compensation
awarded nor shall an employer be entitled to an apportionment of
the
costs thereof as provided in this section, unless the employer
shall cause
the commissioner of insurance, in the capacity of administrator of
the
workers compensation fund, to be impleaded, as provided in K.S.A.
44-
566a and amendments thereto, in any proceedings to determine the
com-
pensation to be awarded a handicapped employee who is injured or
dis-
abled or has died, by giving written notice of the employee's claim
to the
commissioner of insurance ten days prior to the first full
hearing where
any evidence is presented on the claim.

(e) Amendments to this section shall apply only to cases where
a
handicapped employee, or the employee's dependents, claims
compen-
sation as a result of an injury occurring after the effective date
of such
amendments.

(f) The total amount of compensation due the employee shall be
the

Ch. 125 1997
Session Laws of Kansas
635

amount for disability computed as provided in K.S.A. 44-503a,
44-510
through 44-510g and 44-511, and amendments thereto, and in no
case
shall the payments be less nor more than the amounts provided in
K.S.A.
44-510c and amendments thereto.

Sec. 17. K.S.A. 1996 Supp. 44-585 is hereby amended to read
as
follows: 44-585. (a) Premium contributions to the pool shall be
based
upon appropriate manual classification and rates, plus or minus
applicable
experience credits or debits, and minus any advance discount
approved
by the trustees, not to exceed 15% of manual premium. The pool
must
use rules, classifications and rates as promulgated by the
national council
on compensation insurancean approved rating
organization and must
report premium and loss data to a rating organization. Such rates
shall
either be the rates effective June 1, 1994, or the prospective loss
costs,
as defined in K.S.A. 40-1113, and amendments thereto, plus
expenses
necessary to administer the pool. For purposes of subsection (b)
the pro-
spective loss costs shall be presumed to be the 70% required to be
de-
posited in the claims fund. If the pool has been in operation for
more
than five years, the board of trustees may determine such rates as
ap-
proved by the commissioner.

(b) At least 70% of the annual premium shall be placed into a
des-
ignated depository for the sole purpose of paying claims. If so
approved
by the commissioner of insurance, the annual premium to be
designated
to such depository may be determined to be the net amount of
premium
after all or a portion of the specific and aggregate excess
insurance pre-
mium costs have been paid. This shall be called the claims fund
account.
The remaining annual premium shall be placed into a designated
depos-
itory for the payment of taxes, fees and administrative costs. This
shall be
called the administrative fund account.

(c) Any surplus moneys for a fund year in excess of the amount
nec-
essary to fulfill all obligations under the workers compensation
act for
that fund year may be declared to be refundable by the trustees not
less
than 12 months after the end of the fund year, upon the approval of
the
commissioner. Such approval can be obtained only upon satisfactory
ev-
idence that sufficient funds remain on deposit for the payment of
all
outstanding claims and expenses, including incurred but not
reported
claims. Any such refund shall be paid only to those employers who
re-
mained participants in the pool for an entire year. Payment of
previously
earned refunds shall not be contingent on continued membership in
the
pool.

Sec. 18. K.S.A. 44-5,120 is hereby amended to read as follows:
44-
5,120. (a) The director of workers compensation is hereby
authorized and
directed to establish a system for monitoring, reporting and
investigating
suspected fraud or abuse by any persons who are not licensed or
regulated
by the commissioner of insurance in connection with securing the
liability

636 1997 Session
Laws of Kansas Ch.
125

of an employer under the workers compensation act or in
connection
with claims or benefits thereunder. The commissioner of insurance
is
hereby authorized and directed to establish a system for
monitoring, re-
porting and investigating suspected fraud or abuse by any persons
who
are licensed or regulated by the commissioner of insurance in
connection
with securing the liability of an employer under the workers
compensa-
tion act or in connection with claims thereunder.

(b) This section applies to:

(1) Persons claiming benefits under the workers compensation
act;

(2) employers subject to the requirements of the workers
compen-
sation act;

(4) any person, corporation, business, health care facility that
is or-
ganized either for profit or not-for-profit and that renders
medical care,
treatment or services in accordance with the provisions of the
workers
compensation act to an injured employee who is covered thereunder;
and

(5) attorneys and other representatives of employers, employees,
in-
surers or other entities that are subject to the workers
compensation act.

(c) The commissioner of insurance may examine the workers
com-
pensation records of insurance companies or self-insurers as
necessary to
ensure compliance with the workers compensation act. Each
insurance
company providing workers compensation insurance in Kansas, the
com-
pany's agents, and those entities that the company has contracted
to pro-
vide review services or to monitor services and practices under the
work-
ers compensation act shall cooperate with the commissioner of
insurance,
and shall make available to the commissioner any records or other
nec-
essary information requested by the commissioner. The commissioner
of
insurance shall conduct an examination authorized by this
subsection in
accordance with the provisions of K.S.A. 40-222 and 40-223 and
amend-
ments thereto.

(d) Fraudulent or abusive acts or practices for purposes of the
work-
ers compensation act include, but are not limited to, willfully or
inten-
tionally:

(1) Collecting from an employee, through a deduction from wages
or
a subsequent fee, any premium or other fee paid by the employer
to
obtain workers compensation insurance coverage;

(2) misrepresenting to an insurance company or the insurance
de-
partment, the classification of employees of an employer, or the
location,
number of employees, or true identity of the employer with the
intent to
lessen or reduce the premium otherwise chargeable for workers
com-
pensation insurance coverage;

(3) lending money to the claimant during the pendency of the
work-
ers compensation claim by an attorney representing the claimant,
but this
provision shall not prohibit the attorney from assisting the
claimant in

Ch. 125 1997
Session Laws of Kansas
637

obtaining financial assistance from another source, except that
(A) the
attorney shall not have a financial interest, directly or
indirectly, in the
source from which the loan or other financial assistance is secured
and
(B) the attorney shall not be personally liable in any way for the
credit
extended to the claimant;

(4) obtaining, denying or attempting to obtain or deny payments
of
workers compensation benefits for any person by:

(A) Making a false or misleading statement;

(B) misrepresenting or concealing a material fact;

(C) fabricating, altering, concealing or destroying a document;
or

(D) conspiring to commit an act specified by clauses (A), (B) or
(C)
of this subsection (d)(4);

(5) bringing, prosecuting or defending an action for
compensation
under the workers compensation act or requesting initiation of an
ad-
ministrative violation proceeding that, in either case, has no
basis in fact
or is not warranted by existing law or a good faith argument for
the ex-
tension, modification or reversal of existing law;

(6) breaching a provision of an agreement approved by the
director;

(7) withholding amounts not authorized by the director from the
em-
ployee's or legal beneficiary's weekly compensation payment or from
ad-
vances from any such payment;

(8) entering into a settlement or agreement without the
knowledge
and consent of the employee or legal beneficiary;

(9) taking a fee or withholding expenses in excess of the
amounts
authorized by the director;

(10) refusing or failing to make prompt delivery to the employee
or
legal beneficiary of funds belonging to the employee or legal
beneficiary
as a result of a settlement, agreement, order or award;

(11) misrepresenting the provisions of the workers compensation
act
to an employee, an employer, a health care provider or a legal
beneficiary;

(12) instructing employers not to file required documents with
the
director;

(13) instructing or encouraging employers to violate the
employee's
right to medical benefits under the workers compensation
act;

(14) failing to tender promptly full death benefits if a clear
and le-
gitimate dispute does not exist as to the liability of the
insurance company,
self-insured employer or group-funded self-insurance plan;

(15) failing to confirm medical compensation benefits coverage
to any
person or facility providing medical treatment to a claimant if a
clear and
legitimate dispute does not exist as to the liability of the
insurance carrier,
self-insured employer or group-funded self-insurance plan;

(16) failing to initiate or reinstate compensation when due if a
clear
and legitimate dispute does not exist as to the liability of the
insurance
company, self-insured employer or group-funded self-insurance
plan;

638 1997 Session
Laws of Kansas Ch.
125

(17) misrepresenting the reason for not paying compensation or
ter-
minating or reducing the payment of compensation;

(18) refusing to pay compensation as and when the compensation
is
due;

(e) Whenever the director or the commissioner of insurance has
rea-
son to believe that any person has engaged or is engaging in any
fraud-
ulent or abusive act or practice in connection with the conduct of
Kansas
workers compensation insurance, claims, benefits or services in
this state,
that such fraudulent or abusive act or practice is not subject to
possible
proceedings under K.S.A. 40-2401 through 40-2421 and amendments
thereto by the commissioner of insurance, and that a proceeding by
the
director or the commissioner of insurance, in the case of any
person
licensed or regulated by the commissioner, with respect thereto
would
be in the interest of the public, the director or the commissioner
of in-
surance, in the case of any person licensed or regulated by the
commis-
sioner, shall issue and serve upon such person a statement of the
charges
with respect thereto and shall conduct a hearing thereon in
accordance
with the provisions of the Kansas administrative procedure act.
Com-
plaints filed with the director or the commissioner of insurance
may be
dismissed by the director or the commissioner of insurance on their
own
initiative, and shall be dismissed upon the written request of the
com-
plainant, if the director or commissioner of insurance has not
conducted
a hearing or taken other administrative action dismissing the
complaint
within 180 days of the filing of the complaint. Any such dismissal
of a
complaint in accordance with this section shall constitute final
action by
the director or commissioner of insurance which shall be deemed to
ex-
haust all administrative remedies under K.S.A. 44-5,120 and
amendments
thereto for the purpose of allowing subsequent filing of the matter
in court
by the complainant. Dismissal of a complaint in accordance with
this
section shall not be subject to appeal or judicial
review.

(f) If, after such hearing, the director or the commissioner of
insur-
ance, in the case of any person licensed or regulated by the
commissioner,
determines that the person charged has engaged in any fraudulent
or
abusive act or practice, any costs incurred as a result of
conducting any
administrative hearing authorized under the provisions of this
section may
be assessed against the person or persons found to have engaged in
such
acts. In an appropriate case to reimburse costs incurred, such
costs may
be awarded to a complainant. As used in this subsection, ``costs''
include
witness fees, mileage allowances, any costs associated with
reproduction
of documents which become a part of the hearing record and the
expense
of making a record of the hearing.

(g) If, after such hearing, the director or the commissioner of
insur-

Ch. 125 1997
Session Laws of Kansas
639

ance, in the case of any person licensed or regulated by the
commissioner,
determines that the person or persons charged have engaged in a
fraud-
ulent or abusive act or practice the director or the commissioner
of in-
surance, in the case of any person licensed or regulated by the
commis-
sioner, shall issue an order requiring such person to cease and
desist from
engaging in such act or practice and, in the exercise of
discretion, may
order any one or more of the following:

(1) Payment of a monetary penalty of not more than $1,000 for
each
and every act constituting the fraudulent or abusive act or
practice, but
not exceeding an aggregate penalty of $2,500 for any six-month
period;

(2) redress of the injury by requiring the refund of any
premiums
paid by and requiring the payment of any moneys withheld from,
any
employee, employer, insurance company or other person or entity
ad-
versely affected by the act constituting a fraudulent or abusive
act or
practice;

(3) repayment of an amount equal to the total amount that the
person
received as benefits or any other payment under the workers
compen-
sation act and any amount that the person otherwise benefited as a
result
of an act constituting a fraudulent or abusive act or practice,
with interest
thereon determined so that such total amount, plus any accrued
interest
thereon, bears interest, from the date of the payment of benefits
or other
such payment or the date the person was benefited, at the current
rate
of interest prescribed by law for judgments under subsection (e)(1)
of
K.S.A. 16-204 and amendments thereto per month or fraction of a
month
until repayment.

(h) After the expiration of the time allowed for filing a
petition for
review of an order issued under this section, if no such petition
has been
duly filed within such time, the director at any time, after notice
and
opportunity for hearing in accordance with the provisions of the
Kansas
administrative procedure act, may reopen and alter, modify or set
aside,
in whole or in part, any order issued under this section, whenever
in the
director's opinion conditions of fact or of law have so changed as
to re-
quire such action or if the public interest so requires.

(i) Upon the order of the director or the commissioner of
insurance,
in the case of any person licensed or regulated by the
commissioner, after
notice and hearing in accordance with the provisions of the Kansas
ad-
ministrative procedure act, any person who violates a cease and
desist
order of the director or the commissioner of insurance, in the case
of any
person licensed or regulated by the commissioner, issued under this
sec-
tion may be subject, at the discretion of the director or the
commissioner
of insurance, in the case of any person licensed or regulated by
the com-
missioner, to a monetary penalty of not more than $10,000 for each
and
every act or violation, but not exceeding an aggregate penalty of
$50,000
for any six-month period in addition to any penalty imposed
pursuant to
subsection (g).

640 1997 Session
Laws of Kansas Ch.
125

(j) Any civil fine imposed under this section shall be subject
to review
in accordance with the act for judicial review and civil
enforcement of
agency actions in the district court in Shawnee county.

(k) All moneys received under this section for costs assessed,
which
are not awarded to a complainant, or monetary penalties imposed
shall
be deposited in the state treasury and credited to the workmen's
com-
pensation fee fund.

Sec. 19. K.S.A. 44-5,121 is hereby amended to read as follows:
44-
5,121. (a) Any person who has suffered economic loss by a
fraudulent or
abusive act or practice shall have a cause of action against any
other person
to recover such loss which was paid as benefits or other amounts of
money
which were paid under the workers compensation act and to seek
relief
for other monetary damages from such other person based on a
fraudu-
lent or abusive act or practice, except that such other monetary
damages
shall not include damages for nonpecuniary loss. Relief under
this section
is to be predicated upon exhaustion of administrative remedies
available
in K.S.A. 44-1,520 and amendments thereto.

(b) Nothing in this section or K.S.A. 44-5,120 and
amendments
thereto shall prohibit an employer from exercising a right to
reimburse-
ment under K.S.A. 44-534a, 44-556 or 44-569a and amendments
thereto.

Sec. 20. K.S.A. 1996 Supp. 44-5,125 is hereby amended to read
as
follows: 44-5,125. (a) (1) Any person who obtains or attempts to
obtain
any payment of compensation under the workers compensation act
for
such person or who denies or attempts to deny the obligation to
make
any payment of workers compensation benefits; who obtains or
attempts
to obtain a more favorable workers compensation benefit rate or
insur-
ance premium rate than that to which such person is otherwise
entitled;
who prevents, reduces, avoids or attempts to prevent, reduce or
avoid the
payment of any compensation under the workers compensation act;
or
who fails to communicate a settlement offer or similar information
to a
claimant under the workers compensation act, by, in any such case,
know-
ingly or intentionally: (A) Making a false or misleading statement,
(B)
misrepresenting or concealing a material fact, or (C) fabricating,
altering,
concealing or destroying a document; and (2) any person who
conspires
with another person to commit any act described by clause (1) of
this
subsection (a), shall be guilty of:

(A) A class A nonperson misdemeanor, if the amount received as
a
benefit or other payment under the workers compensation act as a
result
of such act or the amount that the person otherwise benefited
monetarily
as a result of a violation of this subsection (a) is $500 or less;
or

(B) a severity level 9, nonperson felony, if such amount is more
than
$500.

(b) Any person who has received any amount of money as a
benefit
or other payment under the workers compensation act as a result of
a

Ch. 125 1997
Session Laws of Kansas
641

violation of subsection (a) and any person who has otherwise
benefited
monetarily as a result of a violation of subsection (a) shall be
liable to
repay an amount equal to the amount so received by such person or
the
amount by which such person has benefited monetarily, with
interest
thereon. Any such amount, plus any accrued interest thereon, shall
bear
interest at the current rate of interest prescribed by law for
judgments
under subsection (e)(1) of K.S.A. 16-204 and amendments thereto
per
month or fraction of a month until repayment of such amount, plus
any
accrued interest thereon. The interest shall accrue from the date
of over-
payment or erroneous payment of any such amount or the date
such
person benefited monetarily.

(c) Any person aggrieved by a violation of subsection (a) shall
have a
cause of action against any other person to recover any amounts of
money
erroneously paid as benefits or any other amounts of money paid
under
the workers compensation act, and to seek relief for other monetary
dam-
ages, for which liability has accrued under this section against
such other
person. Relief under this subsection is to be predicated upon
exhaustion
of administrative remedies available in K.S.A. 44-5,120 and
amendments
thereto.

(d) Nothing in this section shall prohibit an employer from
exercising
a right to reimbursement under K.S.A. 44-534a, 44-556 or 44-569a
and
amendments thereto.

Sec. 21. K.S.A. 74-713 is hereby amended to read as follows:
74-713.
The director shall provide by regulation for the collection of each
carrier's,
self-insurer's and group-funded workers' compensation pools'
propor-
tionate amount of the carrier's share of expense. The maximum
amount
which shall be collected from any carrier, self-insurer or
group-funded
workers' compensation pool shall be 3% of the workers'
compensation
benefits paid by such carrier, self-insurer or group-funded
workers' com-
pensation pool as listed by the director. Such amounts shall be
paid within
30 days from the date that notice is served upon such carrier,
self-insurer
or group-funded workers' compensation pool. If such amounts are
not
paid within such period, the director may assess a civil penalty
equal to
10% of the amount so unpaid for each 30 days the liability remains
due
and unpaid, and such civil penalty shall be collected at the same
time and
as a part of the original amount as determined by the director
under the
terms of this act. Upon assessment, if the total dollar amount
due is $10
or less, the amount due is waived.